By Sam Schechner 

STMicroelectronics NV narrowed its net loss in the fourth quarter, but revenue at Europe's largest semiconductor maker continued to fall.

STMicro, of Geneva, reported a net loss of $36 million, or four cents a share, versus a year-earlier loss of $428 million, or 48 cents a share, largely due to smaller overall operating expenses and reduced impairment and restructuring costs related to its now-discontinued joint venture with Sweden's Ericsson.

Excluding those items, STMicro's adjusted loss was a penny a share, an improvement from an adjusted per-share loss of 11 cents a year earlier. Analysts had seen a roughly break-even performance, after more than two years of quarterly losses.

Net revenue at the company, which makes microchips and sensors for mobile devices and industrial applications devices, fell by 6.8% to $2.02 billion, in the middle of the company's guidance of between $1.94 billion and $2.08 billion. Without ST-Ericsson, however, revenue rose 3.9% from the prior year.

Gross margin grew to 32.9% from 32.3% a year earlier.

The Franco-Italian firm has been reeling from continued losses since it unwound an unprofitable wireless chip joint venture with Ericsson last year. Since then, the company has been pushing a strategic shift away from wireless, to focus more on making electronic sensors for cars and digital devices, as well as new transistor-fabrication technologies it can license to others.

The transition has been difficult. STMicro had to take back a large portion of its old joint venture's staff, along with those costs.

For the current quarter, STMicro said it expects revenue to fall 9.5% on a sequential basis, give or take 3.5 percentage points, and it projects gross margin of 32.4%, give or take two percentage points.

"First quarter revenues reflect, on top of seasonality including the New Year holiday in Asia, a drop in revenues from ST-Ericsson legacy products of more than half from the fourth quarter of 2013 level," Chief Executive Carlo Bozotti said.

Michael Calia contributed to this article.

Write to Sam Schechner at sam.schechner@wsj.com

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